The U.S. Energy Information Administration (EIA) reported a smaller-than-expected natural gas storage injection for the week ending July 17. This bullish surprise indicates a tighter market balance than consensus estimates.
Above-normal temperatures across the U.S. drove record natural gas consumption for electricity generation to meet air-conditioning needs. This robust power sector demand absorbed a larger share of domestic production than anticipated.
Natural gas futures rose over 2% to approximately $2.94/MMBtu following the data. Prices broke through technical resistance levels as traders priced in a tighter supply outlook.
The deviation from the five-year average injection pace has increased concerns regarding storage adequacy for late summer.